In January 2022 the Payment Systems Regulator (PSR) published their initial remedies consultation for its card-acquiring market review.
In this blog we provide a quick summary of the latest outcomes of the market review together with relevant links to the PSR’s website.
What are card acquiring services and why do they matter?
Every time somebody makes a card payment – for example, when buying their weekly groceries – the merchant uses card-acquiring services to accept the payment. These services are critical to the UK economy because they enable consumers and businesses to use their cards to pay for goods and services.
There are around 157 million cards issued in the UK, and consumers made 15.5 billion debit card payments in 2020.1 The crucial role card-acquiring services play in the payments sector means it is important they work well for merchants, and
The PSRs review of the card-acquiring market considered whether the supply of card acquiring services was working well for merchants, and ultimately consumers. The PSR published the Final Report of their findings from the review in November 2021.
The PSR found that the supply of card-acquiring services does not work well for merchants with annual card turnover up to £50 million. These merchants could make savings by shopping around or negotiating with their current supplier, but many do not.
In this consultation from the PSR, they set out the outcomes which should be achieved through the implementation of remedies. They then discuss some potential options to address the features of concern identified in the market review.
The PSR are inviting comments on these points through questions to stakeholders set out in the consultation document. The PSR are also inviting industry to develop and submit detailed specifications for the potential remedies discussed, and alternative suggestions if they wish to propose these.
The PSR plan to issue a provisional decision and draft remedies notice, and a final remedies notice if necessary in 2022.
- Interim report on the supply of card-acquiring services(September 2020)
- Final report on the supply of card-acquiring services (November 2021)
For a full list of background material including consultation documents, responses to consultations, final documents, news and general submissions from 2018 to 2022 visit: Market review into the supply of card-acquiring services.
The outcomes the PSR wants to achieve are:
In the PSR strategy, we identify outcomes we will seek to achieve. These include protecting users of UK payment systems, and promoting competition in markets where it is not sufficient.3 In addressing the features of concern identified in the market review, we aim to achieve these outcomes in the card-acquiring market by improving merchants’ ability to search and switch between providers of acquiring services. This will also strengthen competition between providers of card-acquiring services as they compete more vigorously for merchant business.
Initial remedies consultation for its card-acquiring market review
The publication sets out proposals to improve services and choice for merchants. To make sure the market works better for merchants, we are considering the following four potential remedies:
- Greater transparency: to help merchants understand the pricing elements of any services they use, card-acquirers should provide summary information boxes setting out key price and non-price service elements of card-acquiring services. These should be in both bespoke form and published with general information in generic format.
- Access to comparison tools: like price comparison websites, the PSR wants the industry to help stimulate Digital Comparison Tools (DCTs) for merchants so they can see whether they are getting the best deal.
- Greater engagement: to help merchants know when their contracts are due for renewal, there needs to be an agreed standard of messaging by providers that will help merchants understand that their contract is due for renewal and the terms of the contract on an annual basis.
- The ability to change providers easily: the PSR wants to address barriers to switching between card-acquiring services, which arise from Point of Sale (POS) terminal leases, by looking at potential options for merchants to switch without incurring undue cost or suffering inconvenience from having to also exchange their POS terminal. This may include the replacement of terminals by POS terminal lease providers for instance.
The PSR are seeking feedback on the proposed remedies and also invite industry to develop and submit detailed specifications for the potential remedies discussed, as well as any alternative suggestions.
The PSR will consider the responses to this initial consultation before deciding whether these remedies are the best way to address the features of concern, or if other intervention is needed.
The PSR plan to issue a provisional decision and draft remedies notice, and a final remedies notice later this year.